Filial responsibility a danger when Medicaid is not approved
If your parents do not pay their nursing home bills, there is a chance in Pennsylvania that the lawsuit could be against you. The same may apply to assisted living and hospital bills. Whether this is legal or not under federal law has not yet been decided but adult children cannot ignore the danger that medical providers might look to them for payment.
Under an old concept known as “filial responsibility,” which was quietly moved into the Support law four years ago, Pennsylvania became one of a minority of states where creditors, especially medical providers, might bring a claim against children merely because they are the adult children and for no other reason.
Defenses include that the adult child was abandoned by the parent for 10 years during minority, that is before age 18, or that the claim is higher than a given percentage of the adult child’s income. The parent must be considered “indigent,” a term that is not defined but the law makes clear that it applies to people who are not just on welfare. With high medical bills today it does not take too much to be considered indigent.
Most people, hearing this description, would be shocked since they believe that either Medicare, health insurance, or Medicaid would cover all bills. What they should know is that, rightly or wrongly, if for some reason, a medical provider does not submit a claim on time or a claim is rejected, they might come to look to others for payment including the children.
Pennsylvania’s Act 43 of 2005, the law that moved “filial responsibility” to the forefront, received national attention recently in an article by Alice Gomstyn, ABC News Business Unit, “Pay Your Parents’ Bills or Else” which described, among other things, the story of Andrea August, a 39-year-old Pennsylvania woman who was sued by a Montgomery County nursing home for more than $300,000 in unpaid bills regarding her father and mother. Her father had passed away while a resident at the facility and her mother was still a dementia patient there.
If a properly submitted Medicaid application had been filed and there were no other obstacles such as gifting, Medicaid could have picked up the cost but especially since passage of the federal Deficit Reduction Act in 2006, Medicaid applications are even more difficult to get through.
August was lucky. She hired a lawyer to represent her and then raised under one of the defenses listed above that her income was below the guidelines listed in the law. It could have been easier if she and her parents knew in advance what to do and did it in preparation.
What August did not do and what others cannot do if they want to escape the effect of a filial responsibility lawsuit is to ignore the action or ignore the notices. Once a judgment is entered it can be extremely difficult to overturn even if there are defenses.
Readers might wonder how someone could be caught in this situation. Here are some of the problems and pitfalls that can make this happen.
When parents do not share information with trusted children or advisors. Parents, used to being in charge, are often resistant to sharing their financial information. This can be a mistake. A trusted child or advisor needs to know so that, if the parent becomes disabled there is someone who can answer relevant questions.
When parents do not appoint powers of attorney. In the August case, no one had been appointed power of attorney. This usually means that banks and financial institutions would not disclose the needed information.
Medicaid applications are rejected for lack of information. The most common reason I encounter for rejection of Medicaid applications is failure to supply needed information. People mistakenly believe that, if the assets are down to a given figure, Medicaid will cover automatically. This is absolutely not true. Applicants must prove what all the assets were going back at least to early 2006 and what happened since then. If any amount over $500 total in any given month cannot be accounted for, the County Assistance Office could assume that there was gifting which could result in denial or a penalty period.
When our office deals with a Medicaid application, we learn everything possible to prevent rejection.
Is it legal? Act 43 might well conflict with some federal laws including the Nursing Home Reform Act, OBRA ’87. Until someone is ready to appeal the Act to higher appellate courts, prevention is the best current solution.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.